Friday, December 09, 2005


Are Central Banks Caught Up In 'Gold Fever'?

Reuters has the latest on 'gold fever.' "Gold fever took prices as high as $530.40 an ounce for the first time in nearly a quarter of a century on Friday as investors, particularly in Asia, rushed to buy an asset that has gained over 16 percent in the past month."

"'This buying is just more of the same of what we have been seeing. I suspect also that it may be central bank buying that is supporting it on the dips,' Paul Merrick of RBC Capital Markets said. Spot gold was at $529.70/530.50 an ounce by 1604 GMT, up two percent from $519.50/520.30 last quoted in New York on Thursday. The metal has soared $75, or 16.4 percent, since November 7."

"Some investors were speculating about potential purchases from some of the word's central banks, previously long-time sellers. 'I strongly believe that Asia and China are buying, but we will not know until they've finished buying or are close to it, for sure,' said Juerg Kiener."

"A spokesman at the China Gold Exchange said: 'We have encouraged the Bank of China to buy more gold, or if not, to relax the barriers and allow more Chinese people to do so.' However, he said he was not aware of the central bank's policy on the matter."

"In November Russia, Argentina and South Africa expressed interest in increasing their gold holdings, even though European central banks have sold more than 100 tonnes since September."

"Other precious metals got caught in gold's slipstream, with silver hurdling $9.00 to levels last seen 17-1/2 years ago. Spot was at $9.01/9.04, up 1.4 percent from $8.88/8.91 late in New York. Platinum was at $1,000/1,004 an ounce, against $998/1,002 late in New York. It touched $1,004 against Monday's peak of $1,006, the highest since March 1980."

Still no one over on this blog...
...and I mean that in a disappointed way...
sd cdl:
like the Madman in Nietzsche's classic parable, you have come too soon.
damn. first Russia, Argentina and South Africa. now we learn Asian citizens are starting to buy(or relax restrictions) and the Asian Central Banks are now buying!
I'm here and lurking.

Was hopeing for another pull-back to aquire more Gold but alas i think not, Silver still seems aquireable but one never knows.

Anywho, really just posting to say " Thanks for the work you do, Ben".
Four posters before I got here? Looks like progress to me!!

Gotta understand that this blog isn't as mature as HB2, naturally because the metals are lagging housing in attention. We (and Ben especially) are just out there ahead of the pack. Give them time, they'll come around.

Damn, though, aren't those metals moving! After all the 3 steps forward, 2 steps back this year the rise lately has been breathtaking. I ask again, what changed? Yes, there are lots of reasons for this to be happening, but why exactly now??

Like HB2, this is a great blog, and well ahead of the curve IMO.

I was going over some of your posts in September, about investing in gold and silver. Did you ever post something on e-gold /e-bullion? I couldn't find it.

I suspect the next bubble will be in gold as many people (boomers) hear about possible devaluation of the dollar and try and run for cover to protect their wealth. I think this will cause gold to go up and stay high for quite a while (years) as more and more people hear about it and get into it for personal investment.

I would be very interested in your thoughts on other hedge strategies against inflation /a devaluing dollar - is there anything else other than metals?

I guess the wider question is -
Yes I 100% agree that a big housing crash is coming, and that it will pull the economy into recession. The fed will print money or (less likely) suffer high interest rates. Either way, the dollar will devalue. For someone convinced that a bare emperor is in plain sight - what are the options for savings that are currently in, say a 4% yielding savings account..
Pardon our hand-wringing, but Congress's borrowing spree is out of control. By Thursday the national debt was $8.131 trillion, up $5 billion since Tuesday. At this torrid borrowing rate they'll crash into the debt ceiling by Christmas. Your Congressman probably laughs about it over lunch, but there IS a debt ceiling of $8.184 trillion to be reckoned with. Our guess is the Treasury Department will juggle the numbers next week to postpone the inevitable vote to raise the debt ceiling. In January Congress will just raise the ceiling, without fanfare, and the borrowing frenzy will continue. Unless lenders, mostly foreign, snap their wallets shut and we have to pay phenomenal interest rates to attract them.
BTW, Over the 18 years with Sir Greenspan at the helm the dollar has lost nearly 50% of it's purchasing power. Prices have risen for one reason, the devaluation of the dollar. The general public pays little attention... But why should they we will just print more! No wonder why many are looking toward gold/silver as a safe harbor/wealth preserver...
As has been stated before, Gold still has to more than double just to reach its historical average. Throw in a worldwide recession, some fiat crises, then the inevitable psychological bubble, and suddenly the shiny stuff's at several thousand dollars per ounce.

Buy and hold, buy and hold...
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